County Budget Shortfall: Bum Economy or Overspending?

Depends whom you ask.

Last week, King County Executive Ron Sims posted the following statement on his Twitter page: "Just revised King County's budget shortfall from 86 to 90 million dollars. Inflation and a sluggish economy are reducing revenue growth." The ever-rising projected 2009 general fund budget deficit is a source of endless political back-and-forth between Sims and the King County Council, particularly with council member Larry Phillips, who is considering challenging Sims for the executive's seat next year. But while they disagree over who is responsible for the problem, both say it has been made worse by a sinking economy, rising costs (for example, gas), and a revenue stream stunted by Tim Eyman's 2001 initiative that caps property taxes at 1 percent. But the latest upward revision comes with a twist: Chris Bushnell, the former chief economist for the executive-controlled county budget office (he served from 2002 until January of this year), says the underlying problem isn't revenue, it's that both the council and the executive have spent well beyond the budgets they projected four years ago. Bushnell created a PowerPoint presentation to that effect in early August and showed it to Sims. Printouts of the slides have been circulating among county personnel ever since. Bushnell says he started the project as the deficit number began climbing and county officials started bickering about it. "My goal was to raise awareness that it's their spending choices that will determine the county's financial health," says Bushnell, who holds a doctorate in economics from the University of Washington. His presentation argues that when large deficits in the early part of this decade were finally erased in 2005, the budget office projected revenues that have been relatively close to reality through the first two quarters of 2008—not dramatically less as a result of the Eyman initiative (I-747) or a bad economy. Rather, it's county expenditures that are way up. Bushnell has a chart—created, he says, from publicly available budget documents—which shows that from 2006 through the first two quarters of 2008, about $116 million more was spent than was projected in 2005. Most of that, he says, can be attributed to rising salaries and expanded full-time staffs. The council staff had the highest overall salary growth, 23.5 percent between 2005 and the first part of 2008, according to Bushnell. Executive staff growth was second at 20.2 percent. Bushnell's presentation has gotten Sims' office and Phillips to agree on something: Bushnell has it wrong. Beth Goldberg, the county budget office's deputy director, argues that even without the Eyman initiative, the county would only get an additional $14 million next year to chip away at that $90 million deficit. Goldberg adds that if the county had been raising property taxes above 1 percent since 2001, they would have an additional $100 million in revenue cumulatively. Phillips says he agrees with Goldberg on that point. He also says some of Bushnell's numbers don't match the council's own analysis. For instance, Phillips says staff salaries only rose about 17 percent during the time frame scrutinized by Bushnell. On top of that, Phillips criticizes the time frame itself. "His study only examines a three-year period, which is way, way too narrow a view," Phillips says. "It would be like saying to people in Seattle after three weeks of sunny weather, 'Well, that's the way it's going to be.' We have a lot of dark, rainy, gray days in Seattle." Both Phillips and Goldberg justify rising employee salaries by pointing to studies done by both the executive and council that found people were paid less than their counterparts in similar counties. Hence, many employees got raises beyond what had been projected in 2005. Either way, budget woes are now being projected well beyond next year. County budget director Bob Cowan created his own budget PowerPoint presentation last month, which stated that if additional revenue sources aren't found and unincorporated urban areas (which require the same services as a city but generate less revenue for county government) aren't annexed, more than $70 million will have to be cut from the general-fund budget by 2012, on top of the $90 million that already has to go.